Correlation Between Reliance Industries and Thai Oil
Can any of the company-specific risk be diversified away by investing in both Reliance Industries and Thai Oil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Reliance Industries and Thai Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Industries Limited and Thai Oil Public, you can compare the effects of market volatilities on Reliance Industries and Thai Oil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Reliance Industries with a short position of Thai Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Thai Oil.
Diversification Opportunities for Reliance Industries and Thai Oil
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Reliance and Thai is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and Reliance Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Reliance Industries Limited are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Reliance Industries i.e., Reliance Industries and Thai Oil go up and down completely randomly.
Pair Corralation between Reliance Industries and Thai Oil
Assuming the 90 days horizon Reliance Industries Limited is expected to generate 0.62 times more return on investment than Thai Oil. However, Reliance Industries Limited is 1.62 times less risky than Thai Oil. It trades about -0.03 of its potential returns per unit of risk. Thai Oil Public is currently generating about -0.05 per unit of risk. If you would invest 6,196 in Reliance Industries Limited on September 3, 2024 and sell it today you would lose (416.00) from holding Reliance Industries Limited or give up 6.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Industries Limited vs. Thai Oil Public
Performance |
| Timeline |
| Reliance Industries |
| Thai Oil Public |
Reliance Industries and Thai Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Industries and Thai Oil
The main advantage of trading using opposite Reliance Industries and Thai Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Industries position performs unexpectedly, Thai Oil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thai Oil will offset losses from the drop in Thai Oil's long position.| Reliance Industries vs. Tencent Holdings | Reliance Industries vs. Thermo Fisher Scientific | Reliance Industries vs. Exxon Mobil | Reliance Industries vs. SoftBank Group Corp |
| Thai Oil vs. Marathon Petroleum Corp | Thai Oil vs. Neste Oyj | Thai Oil vs. ENEOS Holdings | Thai Oil vs. PTT OILRETBUS FOR BA10 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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